Sharon vows to 'complete' attack

Ariel Sharon today pledged to continue attacks on Palestinians in the West Bank until the last elements of Yasser Arafat's "terror network" have been "crushed".

The Israeli prime minister's vow came as the Catholic Church and Britain condemned the attack on Bethlehem's Basilica of the Nativity, in which a Palestinian was killed and the offices of a Franciscan monastery were set on fire.

He told the Israeli parliament today: "These missions have not been completed yet and the army will continue operating as quickly as possible until the mission has been completed, until it has dismantled Arafat's terror infrastructure and until the murderers hiding in different places have been arrested."

In a stormy Knesset session, Mr Sharon said he wanted to meet " moderate Arab leaders" to discuss peace efforts. Although he did not specify which leaders, he said he would discuss an initiative with US Secretary of State Colin Powell, who visits the region later this week.

"I am willing to come to any place, with no condition, to speak peace," he said.

President George W Bush demanded at the weekend that Israel immediately withdraw from Palestinian areas. In 11 days of fighting, it has reoccupied six of the eight main Palestinian cities in the West Bank and has confined Palestinian president Mr Arafat to a few rooms in his HQ in the town of Ramallah.

Prime Minister Tony Blair today renewed his support for President Bush's call for Israel to pull back from Palestinian territory. Speaking on a visit to Prague, Mr Blair said he understood's Israel's need to take action against terrorists.

"When your people have been blown up in cafes and bars, then your feelings will be very strong," he said.

However, he added: "There are now innocent people dying also on the Palestinian side. It is important to take measures necessary to restore confidence in the political process."

Mr Bush's demands have also been echoed by the UN Security Council, France and the European Union.

But they have been ignored by Mr Sharon, whose army is locked in bitter fighting in Nablus and Jenin while the stand off at the Basilica of the Nativity entered its sixth day. More than 200 gunmen, priests and nuns are holed up in the Byzantine church, which marks the birthplace of Christ.

Franciscan priests inside the building denied Israeli claims they were being held hostage. Father David Jaeger, spokesman for custodians of Catholic sites in the Holy Land, accused Israel of apparently going back on a promise not to attack the shrine after the monastery came under fire this morning. Speaking from Rome of the Israelis' "indescribable-barbarity", he warned of " consequences that will be long-term and incalculable".

He said Israeli troops appeared to have entered the building temporarily and that Palestinians had collected identity documents and Israeli equipment from the scene of the attack. Israeli restrictions have prevented the media from independently verifying this claim.

British Foreign Office Minister Ben Bradshaw said the Israelis were " playing a dangerous game" in ignoring the US demands and in attacking the church. As the Pope condemned a "thirst for revenge" on both sides, each accused the other of starting the fire.

On the eve of his peace mission, Mr Powell said Mr Bush had made it clear he wanted an immediate withdrawal from Palestinian territories, adding: "And he means now."

Spain, which holds the rotating presidency of the European Union, said the EU would discuss possible sanctions against Israel if it went on rejecting ceasefire calls.